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Privity of Contract
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Flashcards
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An employer signs an agreement with a health insurance provider to provide benefits to its employees.
Employees are third-party beneficiaries and can enforce the contract terms for health benefits against the provider, as they are the intended beneficiaries.
A real estate developer signs a contract with a construction company to build a complex with the promise of a playground for the community.
The community is an incidental beneficiary and cannot enforce the promise of a playground, as they are not the intended beneficiary within the privity of contract.
A parent buys a car for their child, and the sales contract includes free annual maintenance services.
The child is a third-party beneficiary and may enforce the contract's maintenance terms against the dealer, despite not being part of the original agreement.
A contractor signs a contract with a homeowner to build a swimming pool, and the contract specifies the use of a particular brand of pumps.
The pump manufacturer is not a third-party beneficiary because there is no intent to benefit them directly; the privity of contract exists only between the homeowner and the contractor.
A shipping contract between a seller and a transporter includes a clause that goods must arrive by a certain date to meet a buyer's event.
The buyer is a third-party beneficiary who may hold the transporter accountable to the timely delivery clause, as the intent is to satisfy the buyer's timing requirement.
A landlord agrees to install safety features in a building as required by the tenants' employers.
The tenants' employers are not third-party beneficiaries as their interest in safety is only incidental, and there is no direct contractual relationship.
A software firm contracts a security company to safeguard another company's data as part of a service agreement.
The company whose data is being protected is a third-party beneficiary and may enforce the security terms against the security firm.
A university contracts with a computer manufacturer to supply laptops with pre-installed software for its students.
Students are intended third-party beneficiaries and can expect the benefit of pre-installed software on their laptops as per the contract.
A musician enters into a contract with a venue owner to perform, and tickets are sold to fans.
Ticket holders are third-party beneficiaries who can enforce the performance obligation if the venue owner tries to cancel the performance.
An athlete endorses a brand, and part of the contract includes donations to a specific charity.
The named charity is a third-party beneficiary and could enforce the donation provision of the endorsement contract.
A couple books a wedding venue, agreeing that the venue will also provide a cake from a specific baker.
The baker becomes a third-party beneficiary under the agreement and may have rights if the terms involving their service are breached.
A business owner sponsors a local sports team, agreeing to provide branded equipment as part of the sponsorship deal.
The sports team members are third-party beneficiaries who can enforce the contract terms regarding the provision of branded equipment.
A homeowner buys an insurance policy that includes coverage for guests' personal property.
Guests whose property is damaged can be considered third-party beneficiaries and might have the right to claim against the insurance policy.
A celebrity agrees to a book deal with a publisher, and part of the agreement includes a higher royalty rate for the ghostwriter.
The ghostwriter is an intended third-party beneficiary who may enforce the term for the higher royalty rate against the publisher.
Two businesses sign a merger agreement, promising to retain all current employees after the merger.
Employees of both businesses are third-party beneficiaries and may enforce the retention promise if either business attempts to breach the agreement after the merger.
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